The government’s watchdog agency has concluded that more coal plants will retire by 2025 than it previously thought.
In 2012, the Government Accountability Office (GAO) looked into the intersection of market forces and upcoming regulations for coal plants and concluded 2 to 12 percent of the country’s coal capacity would retire as a result. On Monday, GAO returned to the question, and updated their assessment to a solid 13 percent — 42,192 megawatts — that has either been retired since 2012 or is planned for retirement by 2025.
While the report noted these changes “may contribute to reliability challenges in some regions and these actions would likely increase electricity prices in some regions,” industry stakeholders and Regional Transmission Organizations also admitted to GAO that “widespread reliability concerns are not anticipated.” They also acknowledged that they can’t reliably estimate the effects of the retirements because of the complexities of the markets.
GAO looked into four pending Environmental Protection Agency regulations, the newly-proposed federal rule to cut carbon emissions from power plants, as well as several factors outside of government activity: “Stakeholders noted that several industry trends may be contributing to the retirement of coal-fueled generating units,” GAO said in the report. “Including relatively low natural gas prices, increasing prices for coal, and low expected growth in demand for electricity.”
But of those regulations, only the Mercury and Air Toxics Standards (MATS) has an established deadline for compliance — April 2015, the same year GAO expects the bulk of the coal plant retirements to occur. The remaining regulations do not have a set deadline.
The 2015 spike, however, does not mean EPA regulations are the primary force behind the retirements. For example, the market trends GAO noted have been underway for some time as domestic natural gas production has boomed, as the geological limits on coal mining have begun to assert themselves, and as the recession and the rise of energy efficiency have cut electricity demand.
MATS itself was finalized in February 2012, giving power providers just over three years to plan a smooth transition, and the overwhelming majority of industry requests to extend their deadline for one year have been granted.
Furthermore, the vast majority of the coal plants that will be retiring are older, smaller, dirtier, and put to less use by power providers than the coal fleet as a whole. According to a report in September of 2013, fully one third of the U.S. power sector’s carbon emissions could be attributed to just one percent of the nation’s power plants. And the offending plants tend to be the most inefficient and technologically retrograde, and also the ones the industry has kept going a decade or more past their designed retirement date.
In other words, the MATS rule and other EPA moves are arguably putting the nail in the coffin of a process that’s long been unfolding completely independent of the regulations.
The bulk of the retirements will be concentrated in a relatively small number of states, which could arguably exacerbate challenges in those specific regions.
But as Dean Baker, a prominent Washington, D.C. economist and the co-founder of the Center for Economic and Policy Research, pointed out to ThinkProgress, shutting down coal plants also comes with myriad health benefits that boost incomes and economic productivity in the immediate area. Beyond that, clean alternatives to coal — not just natural gas, but wind and soon even solar — are already competitive, meaning switches should come with minimal economic disruption. Renewables can also work in tandem with natural gas, smoothing out any reliability issues with the latter and the intermittency issues with the former.
But perhaps the most telling thing is that, in its 2012 report, GAO recommended that EPA, the Department of Energy, and the Federal Energy Regulatory Commission set up a joint process to monitor the power industry’s progress in complying with the regulations. Since then, as GAO’s new report notes, since then the agencies and industry stakeholders have set up monthly meetings and have developed a shared memorandum to coordinate information and efforts.
With Monday’s update, GAO had no further recommendations to give.